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Bessent Presses Japan to Raise Rates and Restore Fiscal Sustainability at G20 Talks in Asheville
U.S. Treasury Secretary Scott Bessent met Japanese Finance Minister Satsuki Katayama and Bank of Japan Governor Kazuo Ueda on the sidelines of the G20 in Asheville, where he urged Japan to clearly signal its next steps on interest rate hikes and a path toward fiscal sustainability, according to NHK citing a U.S. official. Bessent told the Japanese counterparts that raising rates should be the country's next move, while Katayama responded that Japan aims to deliver a strong economy alongside sustainable public finances and that the BOJ will decide specific monetary policy measures independently.
A senior Japanese Ministry of Finance official stressed after the talks that the BOJ should set monetary policy according to economic needs rather than U.S. requests, a notable pushback against the public pressure from Washington. Katayama separately confirmed with Bessent that orderly foreign exchange movements are essential for global financial market stability, and the two reaffirmed that continued joint coordination on FX benefits stability. Katayama also briefed G7 counterparts on the conditions and factors that led to the recent U.S.-Japan joint FX intervention, with Japan's fiscal policy and the intervention itself among the key topics discussed bilaterally. The yen was trading near 160 against the dollar, with markets pricing in BOJ rate-hike bets.
The diplomatic backdrop is a broader market environment in which war-related crude price gains revived inflation fears and lifted expectations for tighter monetary policy globally. South Korean President Lee separately said a rise in interest rates in his country is unavoidable. Gold edged lower below $4,450 as Middle East tensions added to inflation pressure, while the Canadian dollar consolidated against the U.S. dollar as rising oil prices and Federal Reserve rate-hike bets pulled in opposite directions. Traders were also awaiting U.S. labor market data due later in the week that could further shape Fed policy expectations. A Minneapolis Fed study also found that surging AI-related demand for memory and computer hardware has driven up core U.S. inflation by an amount comparable to the impact of the early 2025 Trump tariffs.
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Sources
- InvestingBessent urges Japan to show path to fiscal sustainability, rate hike - NHK reports
- ReutersStocks weakened with Wall Street turning the page on a volatile month as a war-related jump in crude prices revived inflation fears and raised the likelihood of tighter monetary policy
- FirstSquawkJAPAN'S GROWTH MINISTER KIUCHI SAYS HE AIMS TO APPROPRIATELY CONTROL TOTAL BOND ISSUANCE, ADDING THAT HE CANNOT YET PROVIDE DETAILS OF NEXT FISCAL YEAR'S BUDGET AND DECLINES TO COMMENT ON FOREIGN OFFICIALS' REMARKS
- ReutersBizStocks weakened with Wall Street turning the page on a volatile month as a war-related jump in crude prices revived inflation fears and raised the likelihood of tighter monetary policy. More here:
- BusinessUS Treasury Secretary Scott Bessent told Japanese Finance Minister Satsuki Katayama and Bank of Japan Governor Kazuo Ueda the Asian country’s next step should be to raise interest rates, NHK reports, citing an interview with a US official
- MarketsdayUS Treasury Secretary Bessent met BOJ Governor Ueda and Finance Minister Katayama at the G20 in Asheville, stressing the need for Japan to clearly signal next steps on fiscal sustainability and rate hikes. #Bessent #Treasury
- ForbesResearchers at the Minneapolis Federal Reserve have found that massive artificial intelligence demand on memory and computer hardware has driven up core inflation as much as the tariffs President Donald Trump imposed early last year. Read more: : Spencer Platt via Getty Images
- ETMarketsGold prices steadied on Tuesday as traders assessed Middle East tensions and awaited key U.S. labour market data due this week that could shape expectations for Federal Reserve monetary policy.